What is illiquidity and can it make or break your trades?

"The market can stay irrational longer than you can stay solvent." – John Maynard Keynes

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Ever wondered about the ease or difficulty of selling an asset at a fair price? 

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Take Apple’s stocks, for instance – trading them is as smooth as selling ice cream on a hot day, thanks to their high demand.

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On the other hand, selling something like a rare antique coin or the stocks of a smaller company can be more challenging. 

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That’s illiquidity in action, and it can cost you big time. Let’s find out how to spot illiquidity and avoid its pitfalls.

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What are illiquid assets? Identify them before you trade

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Not all assets are created equal. Here’s how to identify potential liquidity landmines before you invest or trade:

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The price of illiquidity: What’s the catch?

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Illiquidity isn’t just an inconvenience; it can hurt your bottom line:

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Liquidity trading hacks: Strategies for savvy traders

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Don’t let illiquidity put a damper on your trading goals. Here are some battle-tested strategies to navigate it:

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Liquidity trading with Deriv 

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Illiquidity is a fact of life in the trading world, but it doesn’t have to be a showstopper. By understanding the signs and implementing smart strategies, you can navigate these challenges and keep your trading journey smooth sailing. Remember, a healthy balance between liquidity and potential returns is key to unlocking your trading potential.

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On Deriv, you can explore a wide range of assets, from highly liquid options like forex and major stock indices to more specialised offerings. Open a free demo account on Deriv and start practising diversification strategies in a risk-free environment. See firsthand how staying liquid empowers you to react to market opportunities and navigate challenges with confidence.